discussion paper on ecosystem services for the department of agriculture, fisheries ... · ·...

Discussion Paper on Ecosystem Services for

the Department of Agriculture, Fisheries and

Forestry

Final Report

July 5, 2012

This report was prepared by Board members, staff, fellows and scholars of Australia21,

including:

Steven Cork

Geoff Gorrie

Peter Ampt

Simone Maynard

Philippa Rowland

Rachel Oliphant

Lynne Reeder

Lyn Stephens

Australia 21 Limited

ABN 25 096 242 410 ACN 096 242 410

PO Box 3244, Weston, ACT 2611

Phone: FAX: E-mail: Web:

02 6288 0823 02 6288 0823 [email protected] www.australia21.org.au

Ecosystem Services Report i

Glossary of key terms and acronyms

DAFF Australian Government Department of Agriculture, Fisheries and

Forestry

DSEWPaC Australian Government Department of Sustainability, Environment,

Water, Population and Communities

Ecosystem A system in which a range of species interact with one another and

with the non-living environment. Although ecosystems rarely have

clearly defined boundaries and are constantly changing, this term is

used to convey the fact that species often interact with one another in

complex ways that result in processes that would not happen if

individual species functioned in isolation from one another. This is an

example of the total outcomes from ecosystems being more than the

sum of the parts. Consequently, ecosystem services are services that

could not be produced by individual species operating alone.

Ecosystem

services

Broadly, benefits to humans from ecosystems. More specifically, the

latest thinking has tightened up the definitions used when strict

accounting of ecosystem services is required (e.g., in economic

valuation, environmental accounting, or planning decisions that involve

tradeoffs between services and/or between environmental and other

factors). Firstly, some have argued that the term ‘ecosystem services’

should be reserved for services that come from ecosystems without any

human input (e.g., water filtration through native vegetation systems in

catchments). Human inputs are often required to turn ecosystem

services into benefits (e.g., ecosystems might make opportunities for

angling possible but turning this into the benefit of recreation required

the actions of the angler). This clearly separates some actions by land

managers (e.g., planting exotic plants to stabilize soil or fight salinity)

from ecosystem services (without denying the potential value of those

actions). Where land managers recreate natural ecosystems (e.g.,

replanting riparian vegetation) it might be argued that ecosystem

services are generated after the human actions have been completed.

Secondly, to avoid confusion and double-counting of benefits and to

better align ecosystem services with theory in economics and ecology,

the latest definitions distinguish between ecosystem services that can

be turned directly into benefits (commonly called ‘final ecosystem

services’) and those that support other services (commonly called

‘intermediate ecosystem services’). A further extension is to identify

the specific beneficiary of the benefit to assist with its valuation and the

avoidance of double counting.

Ecosystem services have been classified under many different headings

but the three most commonly used to encompass final ecosystem

Ecosystem Services Report ii

services are: Provisioning services (e.g., provision of the conditions for

food, fibre, water, natural medicine and genetic resources); Regulating

services (e.g., regulation of climate, water flows, erosion and

pollination); and Cultural services (e.g., recreation, ecotourism,

aesthetic and heritage values). A further heading — Supporting

services (e.g., soil formation, photosynthesis, water and nutrient

cycling) — is commonly used to describe services that usually are

intermediate. Some services can be final in some situations and to some

beneficiaries but intermediate in other situations.

Ecosystem

approach or

ecosystem

management

Broadly, environmental management at an ecosystem scale (i.e., a focus

on ecosystems rather than individual species). An ecosystem approach

usually includes a focus on ecosystem services. The UK Department for

Environment, Food and Rural Affairs, for example, states:

The ecosystems approach has been defined in various ways, but the

core of the approach lies in integrating and managing the range of

demands placed on the natural environment in such a way that it can

indefinitely support essential services and provide benefits for all.224

The recent review of the Environment Protection and Biodiversity

Conservation Act 1999 22 recommended that environmental

management in Australia should adopt an ecosystem approach and

defined that approach to include such elements as: management

decentralised to the lowest appropriate level; considering the effects of

management activities on adjacent and other ecosystems; where

ecosystems are managed in an economic context, reducing market

distortions that adversely affect biological diversity, aligning incentives

to promote biodiversity conservation and sustainable use, and

internalising costs and benefits in the given ecosystem to the extent

feasible; conserving ecosystem structure and functioning in order to

maintain ecosystem services; managing at appropriate spatial and

temporal scales; setting objectives for the long term, recognising the

varying temporal scales and lag‐ effects that characterise ecosystem

processes; seeking an appropriate balance between conservation and

use of biological diversity; considering all forms of relevant

information, including scientific and indigenous and local knowledge,

innovations and practices; and involving all relevant sectors of society

and scientific disciplines.

When defined in this way, the ecosystem approach is virtually identical

to an ecosystem stewardship approach.

Ecosystem

services

approach

An approach to considering the full range of potential benefits to

humans from ecosystems in a strategic way using language and

concepts that are understandable to a wide range of people. The

essence of an ecosystem services approach is to engage specialists and

stakeholders in identifying the nature of potential benefits and to

consider the full suite of benefits and implications strategically before

Ecosystem Services Report iii

focusing on actions that might involve some stakeholders and some

services. The intent is to avoid unintended consequences that often

arise when only a narrow range of benefits and beneficiaries are

considered. These unintended consequences range from inefficient and

ineffective use of natural resources to undermining of biodiversity

and/or human social and economic wellbeing. Economists call them

‘externalities’ – impacts that occur external to the scope of the

transactions being considered. While a range of classifications of

ecosystem services have been developed and approaches to assessing

ecosystems services in monetary and other terms have been proposed,

the essence of an ecosystem services approach is to not be wed to any

established scheme but to consider the particular situation and apply

the most appropriate methods from disciplines like economics, ecology,

psychology and others. An ecosystem services approach, therefore, is

not an alternative to economic, ecological or other disciplinary

approaches, but rather an approach that seeks to integrate these

disciplines to encourage strategic conversations about ecological, social

and economic dimensions of complex issues facing society.

Ecosystem

stewardship

Ecosystem scale management that also considers social and other

factors relating to the resilience of coupled ecosystems and human

social systems and the ability of those systems to adapt or transform in

response to change — explored more fully in Chapter 6.

Stewardship This is the concept of responsible caretaking or a duty of care. It is

based on the premise that land managers have responsibilities to

manage land and natural resources for future generations.

Environment Used in this report to mean ‘natural environment’ unless indicated

otherwise. This is intended to mean all aspects of climate, soils, water

and biodiversity, including landscapes managed for agriculture and

urban landscapes where native species are present and interact with

one another to form ecosystems.

IPBES IPBES stands for ‘Intergovernmental Platform on Biodiversity and

Ecosystem Services’. IPBES will be an interface between the scientific

community and policy makers that aims to build capacity for and

strengthen the use of science in policy making.125 IPBES will be a

mechanism that addresses the gaps in the science policy interface on

biodiversity and ecosystem services globally. IPBES was formed in

2010 as a merging of the follow-up processes from the Millennium

Ecosystem Assessment and the International Mechanism of Scientific

Expertise on Biodiversity. The United Nations Environment

Programme (UNEP)is cooperating with the United Nations Educational,

Scientific and Cultural Organization (UNESCO), the Food and

Agriculture Organisation of the United Nations (FAO), the United

Nations Development Programme (UNDP) and other organizations to

operationalise IPBES. Australia has been involved in the establishment

Ecosystem Services Report iv

of IPBES.20

Market A market is any process by which things are traded between people.

Markets develop when goods or services have clear value, it is clear

who has rights to that value, and the conditions exist for those rights to

be traded with others. Prices for goods and services are determined by

what participants in markets are prepared to pay versus what those

selling are prepared to accept. Non-market values are a reflection of the

worth that people seem to place on things that don’t pass through

markets (e.g., rare species that no-one owns and no-one can sell).

Market-based

instruments

(MBI)

Ways of achieving policy outcomes by encouraging the development

and/or direction of markets. In relation to ecosystem services, This

usually involved use of regulations, caps on resource use and/or

incentive payments to create demand for services that otherwise would

not be traded in markets and/or to create a degree of temporary or

permanent ownership of a natural resources so that trading in a market

can occur (e.g., giving an investor the right to own and sell the carbon

accumulated in trees under certain conditions).

Millennium

Ecosystem

Assessment

The Millennium Ecosystem Assessment (MA) was called for by the

United Nations Secretary-General Kofi Annan in 2000. Initiated in 2001

and completed in 2005, the objective of the MA was to assess the

consequences of ecosystem change for human well-being and the

scientific basis for action needed to enhance the conservation and

sustainable use of those systems and their contribution to human well-

being. The MA involved the work of more than 1,360 experts

worldwide. Their findings, contained in five technical volumes and six

synthesis reports, provide a state-of-the-art scientific appraisal of the

condition and trends in the world’s ecosystems and the services they

provide (such as clean water, food, forest products, flood control, and

natural resources) and the options to restore, conserve or enhance the

sustainable use of ecosystems.144

National

Environmental-

Economic

Accounts

As part of the System of National Accounts, the Australian Bureau of

Statistics is exploring ways to improve collection of information on the

environment10

National Plan

for

Environmental

Information

On 11 May 2010 the Minister for Environment Protection, Heritage and

the Arts announced a new initiative to address the environmental

information needs of the nation. The National Plan for Environmental

Information is the first step toward a long-term commitment to reform

Australia's environmental information base and build this critical

infrastructure for the future. The plan is a whole-of-government

initiative implemented jointly by the Department of Sustainability,

Environment, Water, Population and Communities and the Bureau of

Meteorology.19

Ecosystem Services Report v

Natural

resources

All resources that come from nature, including not only native genes,

species and ecosystems but also soils and water that play a role in

supporting industries and societies.

Natural

resource

management

(NRM)

The management of natural resources, including management for

conservation, agriculture, urban consumption and any other purposes.

Note that some groups and agencies define NRM more narrowly to

either mean conservation management or management for agricultural

production but not both. In this paper we take the term at face value –

to mean the management of all resources that are part of the natural

environment.

Non-market

values

Non-market values are a reflection of the worth that people seem to

place on things that don’t pass through markets (e.g., rare species that

no-one owns and no-one can sell). Economists have devised a range of

techniques to estimate what this worth is. These are all based on

gauging what people would be willing to pay if there were a market or

what tradeoffs they are willing to make in terms of market-based

values (e.g., how much more they might pay for food or water to

protect biodiversity or maintain soil health). There has been a long

debate about how to use non-market values in decision-making (for

example, how well do people’s stated preferences match their actual

behaviour and decisions?).

SEEA The System of Environmental-Economic Accounts (SEEA) is the

statistical framework that provides internationally agreed concepts,

definitions, classifications, accounting rules and standard tables for

producing internationally comparable statistics on the environment

and its relationship with the economy. The SEEA approach is being

revised under the guidance of the United Nations Statistics Division.231

This revision is likely to include an ecosystem assessment approaches

based on ecosystem services.114

Stewardship This is the concept of responsible caretaking or a duty of care. It is

based on the premise that land managers have responsibilities to

manage land and natural resources for future generations.

WAVES The Wealth Accounting and Valuation of Ecosystem Services (WAVES)

programme (World Bank, United Nations Environment Programme and

various partners) is the mechanism by which ways to include

environmental information into SEEA are being investigated.137

Ecosystem Services Report vi

Executive summary

Ecosystems are complex interactions among living and non-living components of the

environment (e.g., forests, grasslands, riverine ecosystems, marine ecosystems). These

interactions mediate processes that achieve major transformations of resources, many of which

rival or exceed what can be achieved cost-effectively by humans (e.g., maintenance of

atmospheric gases, large-scale filtration and purification of water, or widespread control of

potential pest species). These transformations support and enrich human life, but are often

overlooked and/or undervalued in decision-making because decision-makers lack relevant

information about them and because they do not pass through markets and therefore do not

have economic value attached to them.

The term ‘ecosystem services’ has been used to denote the transformations of resources that can

be turned into benefits by humans (Box 1). A typical definition is “… the direct and indirect

contributions of ecosystems to human well-being”).

Box 1: Examples of ecosystem services (adapted from Maynard et al.150)

Provision of:

Food

Water for Consumption

Building and Fibre

Fuel

Genetic Resources

Biochemicals, medicines and pharmaceuticals

Ornamental Resources

Transport Infrastructure

Regulation of:

Air Quality

Habitable Climate

Water Quality

Arable Land

Buffering Against Extremes

Pollination Pests and Diseases

Productive Soils

Noise Abatement

Support for human culture and social values by provision of:

Iconic species

Diverse environmental characteristics of cultural significance

Support for spiritual and religious beliefs

Systems from which humans can increase their knowledge

Inspiration

Aesthetically satisfying experiences

Mediation of social interactions

Sense of place

Iconic landscapes

Recreational opportunities

Therapeutic landscapes

Ecosystem Services Report vii

Since the late 1990s, a large body of literature has developed focusing on how to categorise and

assess ecosystem services and how to integrate ecosystem services analyses with other

approaches to planning and decision-making. An ecosystem services approach does not seek to

replace other approaches or be a new discipline — it simply aims to name and categorise

benefits from ecosystems, and the processes that lead to those benefits, in ways that enable

diverse stakeholders to then apply the tools of ecology, economics and social science in an

informed way and to interpret what those tools are telling them in straightforward language.

An ecosystem services approach is an integrative approach to analysing environmental benefits

and beneficiaries. It draws on tools from diverse disciplines, including economics (e.g., benefit-

cost analysis, total economic value, non-market valuation) and ecology (e.g., energy and material

balances, resource utilisation analyses, population regulation) and social sciences (e.g.,

understanding of how interactions between people and the environment affect physical and

mental health and wellbeing).

The key contributions of an ecosystem services approach are to provide an holistic framework

for considering all benefits from the environment in an integrated way and to use language and

concepts that allow stakeholders from across societies to take part in meaningful dialogue about

environmental-social planning and policy. As such, the concept of ecosystem services it is

potentially an important component of approaches taken by governments, non-government

organisations, businesses and community groups for thinking strategically about investments in

natural resource management. This is particularly important when dealing with complex, social-

ecological issues like population, climate change, food security and water use, that have no easy

solution and require collaborative dialogue among stakeholders to build understanding, trust

and support for hard decisions.

The past decade has seen intense debate about how to characterise ecosystem services so that

this style of thinking can be aligned with other approaches to assessing resource-use by humans.

Most recent typologies have concentrated on:

separating the contributions from ecosystems from those of humans (e.g., an ecosystem might provide clean water and fish but humans provide vehicles, boats,

fishing lines and other inputs that lead to the benefits of commercial and recreational

angling) (Figure 1)

categorising ecosystem services and benefits in ways that avoid double-counting in environmental accounting and/or benefit-cost analyses (e.g., pollination of crops by

native insects contributes to the value of those crops along with contributions from

soil organisms that maintain soil fertility, so it is important that these two types of

ecosystem services are considered as input to a ‘final service’ of ‘support for crop

production’).

Ecosystem services assessments are an integral part of what has been termed ‘the ecosystem

approach’ to natural resource management, which is now advocated by major governments

around the world, including the UK, USA, Canada the EU, New Zealand and Australia. Recent

approaches to ecosystem services assessments have incorporated advances in understanding

resilience and adaptability of social and ecological systems – an approach sometimes called

‘ecosystem stewardship’. Ecosystem services approaches are now making important

Ecosystem Services Report viii

contributions internationally and within Australia to the development of environmental-

economic accounts.

This report reviews recent developments in thinking about ecosystems services, in Australia and

internationally, and considers how this concept can contribute to policy and management in

relation to natural resources and human well being in Australia. It concludes that there are still

issues to be addressed in relation to how an ecosystem services approaches might be put into

practice, but that the concept already has several unique contributions to make.

Figure 1: The conceptual framework used by The Economics and Ecosystems and Biodiversity project to link

ecosystems and human wellbeing.215

The issues to be addressed include:

there is still some disagreement among experts about defining and operationalising ecosystem services frameworks (although consensus is emerging that different

definitions and approaches are probably needed for different situations and

applications, and there are now numerous examples of successful applications around

the world)

methods for measuring the outputs from ecological systems in relation to human needs, and/or predicting the impacts of policies and management decisions on these

outputs, are still not adequate for many purposes (although this is a problem common

to all approaches to environmental policy and management and is not uniquely

relevant to ecosystem services approaches)

methods for assessing the economic implications of ecosystem services that do not pass directly through markets (e.g., cultural or spiritual values of landscapes or the

influence of scenic views on where people live or how much they are prepared to pay

for houses or for the right to visit remote places) are still not developed or accepted to

the point that they carry weight in decision-making in Australia).

Ecosystem Services Report ix

This report concludes that one powerful contribution of ecosystem services approaches is to

cross-societal dialogue in relation to major, complex environmental-social challenges facing this

country. People across Australian society are demanding greater involvement in decisions about

such issues and they want to know that the different parts of governments are thinking

strategically about the role of the environment in these issues. The language and concepts of

ecosystem services offers a platform for this sort of dialogue, but it requires some steps to be

taken by governments:

developing and promoting a common understanding across governments and society about the nature of ecosystem services and the benefits that can be drawn from them

using that understanding to promote strategic dialogue among disciplines, government departments and across society about priorities for managing human-environmental

interactions in the short and longer-term future

considering how responsibilities for management ecosystem services can be shared across society (i.e., moving away from the model of governments taking all of the

responsibility).

Australia has a very good record of using ecosystem services as the focus for constructive

dialogue between scientists, communities and government decision makers, which has led to

tangible planning outcomes. Regional communities have shown they are able to consider

sophisticated biophysical, economic and social information in these dialogues and to develop

robust, defensible and monitorable plans as a result. This, together with moves to include this

sort of information in national accounts, should give governments confidence that there are

sufficient skills in communities, academia, non-government organisations and governments to

support much better national strategic dialogue than has been had previously.

Recommendations

Further explanation of these recommendations can be found in Section 11.5 of the report.

Recommendation 1: Develop a process for strategic dialogue and planning within the

Australian Government that considers the full range of potential benefits from

ecosystems along with other information relevant to strategic decisions.

Recommendation 2: Explore improvements to governance arrangements to encourage

appropriate sharing of responsibility for strategic alignment of human wellbeing and

ecosystem management across society

Recommendation 3: To support all of the above, continue and enhance initiatives to

establish an appropriate and accessible set of information capable of supporting strategic

dialogue about ecosystem management and human wellbeing

Recommendation 4: Build on and enhance Australia’s investments in innovative ways to

link ecological and economic research with business to drive desirable environmental

change

Ecosystem Services Report 1

1 Introduction

The concept of ecosystem services has been gaining traction globally and in Australia for over a

decade. The interest in the concept has generated many different interpretations and

applications by government agencies and non-government organisations. Nowhere has the

proliferation of opinions and ideas about ecosystem services been greater than in regard to

agriculture and the management of mixed-use landscapes.

This discussion paper synthesises aspects of ecosystem services thinking and practices, in

Australia and internationally, and considers how the concept could contribute more broadly to

the policy imperatives of the Department of Agriculture, Fisheries and Forestry (DAFF).

Given that the concept of ecosystem services has been prominent in the scientific literature for

over a decade and has been discussed both within government and among DAFF’s stakeholders,

one might ask why DAFF has commissioned this study now. Indeed, this question was asked by

several of the stakeholders that we interviewed. There are two answers to this question.

Firstly, DAFF has been investing in thinking about ecosystem services for much of the past

decade. It was Land & Water Australia, within the DAFF portfolio, that was one of the first

agencies to fund a major ecosystem services project in Australia. 65 In addition to support for

research on ecosystem services, DAFF’s investment has included discussion papers to develop

the concept and make it applicable to the practical issues faced by land managers. 146 Ecosystem

services are in integral part of the Caring for Our Country program, jointly administered by

DAFF and the Department of Sustainability, Environment, Water, Population and Communities

(DSEWPaC). That programme includes a number of strategies for improving ecosystem services

outcomes from farm management, and especially soil management which has been poorly

understood and underestimated until recently.13

Secondly, insights from research on ecosystem and community resilience, together with public

service reform and attempts to link carbon emissions policy with broader environmental

objectives have brought a new focus on strategic thinking about multiple social and economic

benefits from the environment.

There has been growing interest in policy circles and the broader community in how to make

Australian society more resilient and able to adapt to change.18, 52, 59, 86, 149, 197, 240 Research in this

area has shown that social and ecological systems cannot sensibly be considered in isolation

from one another.

In the past, government departments tended to act as silos. More recently, however, the process

of public service reform, in both the Australia Government and the states and territories, has

emphasised the need for whole of government approaches to tackling major challenges.

Examples of such challenges include changes in the state of Australia’s natural resources, the

demands that Australians place on those resources, and the local, national and global drivers of

environmental, social and economic change.

In September 2011, the announcement of details of the Australian Government’s policies to

address carbon emissions included a Biodiversity Fund that aims to achieve multiple

environmental, social and environmental benefits linked to carbon policy.


Together, these developments call for a framework that enables all Australians to engage in

dialogue about the relationships between humans and the natural environments in which they

live. The concept of ecosystem services is aimed at supporting this broad and open dialogue in

ways that allow potential synergies and tradeoffs among social, economic and ecological

objectives to be identified and addressed with due reference to the multiple perceptions that

people have about benefits and beneficiaries from the environment.

Apart from these reasons for exploring the use of an ecosystem services framework and

language in Australia, this approach is increasingly being used in international dialogue, in

which Australia can, and should, be playing a key role. Major nongovernmental organizations

(NGOs) and global intergovernmental agencies have been developing ecosystem services

programs for several years now. These include The Nature Conservancy, the World Wildlife

Fund, the World Resources Institute (WRI), the United Nations Development Program (UNDP)

and the World Bank.204

DAFF’s purpose in commissioning this paper is to assess whether the intentions of ecosystem

services approaches are appropriate and can be put into practice in Australia and globally and to

ask what steps might need to be taken to achieve these intentions.


2 Terms of Reference

The Terms of Reference for this project were to:

Review current ecosystem services definitions and discuss their appropriateness for use

in Australia

Examine available conceptual frameworks for ecosystem services - is there a framework

within which the impacts of multiple benefits on multiple ecological, social and economic

processes can be considered that might be best suited for use in Australia?

Briefly review activities currently underway in Australia and overseas that seek to

incorporate ecosystem services approaches into the management of natural resources,

and outline the reasons as to why this approach has not yet been more widely adopted in

Australia

Provide an example framework for the ecosystem services associated with rural lands

using Australian examples

Identify the likely nature of the costs and benefits of an ecosystem services approach for

Australia, and the types and scales of supporting information needed to assist in

developing an Ecosystem Services framework which could support analysis and

discussion of tradeoffs; for example to inform the sustainable population debate.

Discuss how an ecosystem services approach could be implemented with reference to

associated policy measures such as regulation, legislation, market based instruments,

codes of conduct, environmental management systems/certification schemes,

environmental impact assessment to improve government and other decision-making.

This report in intended to be a key input to a multi-stakeholder workshop/ forum, which will

aim to:

establish an agreed definition and conceptual framework suitable for further

consideration of an ecosystem services approach for Australia

share experiences with implementing services approaches within government agencies

and with key interested stakeholders

discuss barriers to the wider adoption of ecosystem services within Australian

government agencies and how this might be addressed

provide recommendations for further work


3 Approach

The discussion paper was developed using the following approaches:

A targeted review of the literature to develop a summary of how the concept of

ecosystem services has evolved and been applied in Australia and around the world, and

to identify how an ecosystem services approach compares and contrasts with alternative

approaches to addressing similar policy issues

Interviews with key policy makers, researchers and people who have been involved in

developing and implementing ecosystems services approaches and/or alternative

approaches to similar policy issues

Development of a systems map of critical issues (driving, enabling, disabling factors, key

organisations and their interactions)

Regular dialogue with DAFF staff to review progress and emerging ideas and conclusions

Two small working meetings with DAFF staff and selected key experts and stakeholders

to develop and refine an example of how an ecosystem services approach might be

applied in DAFF’s policy environment

Preparation of a detailed progress report and a final report.

The interviews were the key component of the project because much has been written in a range

of literature and media but the attitudes and interpretations of key stakeholders, which

ultimately affect what policies are developed and implemented, are usually not recorded

explicitly and in detail. The interviews were carried out as free-ranging conversations aimed at

establishing:

What the interviewee understood about the concept of ecosystems services

How useful they thought that concept was

Whether it meets particular needs of decision makers at some or all levels of government

and/or non-government decision-making in Australia

Whether there are alternative and/or better ways to address those needs

How those needs are currently being met and could be met better (considering the full

range of roles government and non-government contributors but especially considering

role of government agencies at all levels), including consideration of what barriers exist

to meeting the needs and how those barriers might be overcome.

The interviews ranged in time and depth from a few minutes to an hour, depending on how

much time an interviewee had available and how relevant their experiences were to the

questions being addressed. As themes began to emerge, some interviews were focussed on

obtaining views on only one or a few key issues.

As our focus was on assessing how well the concept of ecosystems services might help address

the issues surrounding relationships between people and the environment, all of those chosen

for interview were people who were expected to be familiar with these issues. To date over 50

people have been interviewed specifically for this project, as indicated in Table 1. Some of those

interviewed have themselves conducted interviews with a range of stakeholders about their

understanding of the concept of ecosystem services, so we have drawn on those processes

indirectly as well. Two other important source of insights for this report were a two-day


workshop on ecosystem services convened by Charles Sturt University and CSIRO in August

2011 and a one-day forum on carbon policy at the Crawford School, ANU, both of which

addressed a range of issues relevant to this project. The opportunity was taken to discuss

aspects of the project with numerous participants in those workshops. Finally, we have drawn

on a series of interviews conducted as part of a project for the Murray Darling Basin Authority

(MDBA) in 2010,61 which also asked people about aspects of the processes for management of

natural resources that provide context for the current project. The numbers of these interviews

are given in the ‘indirect column in Table 1.

Table 1: Categories of people interviewed directly so far in this study or whose views have been captured

indirectly through the MDBA study.

Characteristics Number of

interviews

Direct Indirect

Australian government policy officers experienced in dealing with relationships

between people and the environment

14 >20

State government policy officers experienced in dealing with relationships between

people and the environment

6 >20

Local Government and catchment management bodies 4 >20

Farmers 1 >30

Private investors, investment brokers, business advisors 8 >20

Researchers who have been involved in developing ecosystem services approaches in

collaboration with governments, regional bodies and other stakeholders

(universities, CSIRO and other)

21 >30

Non-government environment and industry representative organisations 3 >10


4 Issues, origins and definitions

Key conclusions from this chapter:

The concept of ecosystem services is now widely used by governments and non-government

organisations around the world. The concept has evolved over the past four decades to

facilitate dialogue about the relationships between humans and the natural environment, by

describing the benefits that humans obtain from the environment in language that a wide

range of stakeholders can understand

The concept of ecosystem services is not intended to focus solely on economic assessments

of worth. It is intended to provide a bridge between economic and ecological sciences and

between land-use and land-protection interests

Much of the development of the concept over the past decade has been aimed at improving

its ability to be used along side theory and tools from ecology, economics and social sciences

An ecosystem services classification should have the following elements: A definition of

ecosystem services; a framework relating ecological processes to the benefits that flow to

people and, broadly, who those people are; a list of services (often including a higher-level

grouping of services based on broad types of services and/or the benefits they provide)

Definitions of ecosystem services appear to be in a transition from ones that saw ecosystem

services as ‘benefits to people from ecosystems’ to ones that define ecosystem services as

ecological phenomena and benefits as things that flow from services as a result of human

inputs

To avoid problems of double counting in environmental-economic accounts, a distinction has

been made in all recent major studies between ‘final ecosystem services’ — those that are

directly used by people to provide benefits — and ‘intermediate ecosystem services’ — those

that form part of a ‘cascade of services’ that support one another and underpin final services

Although agreement on a common definition of ecosystem services is likely to be achievable

in the near future, it is recommended by several experts that there should be different

classifications of ecosystem services for different purposes (although those different

classifications should be consistent with one another)

The concept of ecosystem services has been evolving since the 1970s (Figure 2). Its ultimate

origins can be traced to the coining of the term ‘ecosystem’ in the 1930s or even to the origins of

ecosystem ecology in the 1880s.155


Figure 2: Stages in the modern history of ecosystem services.109

‘Ecosystem services’ is the term that has been used most frequently,92; 69; 144 but various

alternative have been suggested, including: ‘environmental services’;201 ‘public-service functions

of the global environment’;118 ‘public services of the global ecosystem’;91 and ‘nature’s

services’.242

Widespread acceptance of the concept can be tracked to Daily’s 1997 book ‘Nature’s Benefits’.74

Since then the development of the concept has proceeded on four main fronts:

Enumeration of examples of economic and other benefits to society of individual

ecosystem services or some bundles of services

Development of increasingly sophisticated quantitative and qualitative models of the

interactions among social, economic and environmental systems

Use of the concept, and often the models referred to above, as a tool to engage diverse

stakeholders in dialogue about relationships between humans and the natural

environment to support better planning and natural resource management

Debate among ecologists and economists to try and harmonise typologies for ecosystem

services with the ways in which these disciplines define ‘functions’, ‘processes’,

‘services’, ‘benefits’ and ‘values.

The history of ecosystem services in economic theory and practice: From early notions

to markets and payment schemes.

4.1 Where an ecosystem services approach fits with other approaches

In Chapter 6, we discuss in detail what taking an ‘ecosystem services approach’ means. In

summary, an ecosystem services approach is primarily an environmental benefits and

beneficiaries analysis. Although such analysis can be put together using other tools, an


ecosystem services approach tries to do this more holistically and with more generally-

understandable language than other approaches. As such it is potentially an important

component of approaches taken by governments, non-government organisations, businesses

and community groups in assessing the relative merits of current decisions and thinking

strategically about future investments in natural resource management. To be useful it must be

compatible with other frameworks and tools that support decision-making in natural resource

management (Box 2). Much of the refinement in ecosystem services definitions and approaches

over the past decade has aimed at achieving this compatibility.

Box 2: Examples of tools proposed by the US Environmental Protection Agency to support their

sustainability framework. An ecosystem services approach should be seen as part of a set of

mutually compatible approaches that support decision-making.

Risk Assessment

Life-Cycle Assessment

Benefit-Cost Analysis

Ecosystem Services Valuation

Integrated Assessment Models

Sustainability Impact Assessment

Environmental Justice Tools

Present and Future Scenario Tools

4.2 Issues that the concept addresses

The language and concepts of ecosystem services (‘benefits to humans from ecosystems’)

emerged due to concern among leading ecologists and economists that, not only was the welfare

of other species being given inadequate consideration in decisions by governments, businesses

and communities, but benefits critical to human wellbeing were also being overlooked with

potentially major, even disastrous, implications. It was argued that these benefits were

overlooked due to at least three major ‘failures’ of decision-making:

Lack of broad understanding about benefits from ecosystems within societies

The absence of markets for many of these benefits because they are of mostly public

rather than private benefit

The tendency of decision makers at all levels of society to deal with complex issues, such

as those relating to ecological or other complex systems, by reconceiving them as simple

cause and effect problems and/or to deal with only small parts of a system issues rather

than trying to understand and manage the system itself

These challenges have been recognised by economists for some time. They are elements of

‘market failure’ and are frequently referred to as ‘information failure’, ‘institutional failure’ and

‘intervention failure’.

Ecologists have also recognised some of these issues, particularly the third, which is one reason

that the term ‘ecosystem’ emerged in the 1930s — to emphasise that the interactions among

species and between species and the non-living environment are complex and generate

outcomes that are ‘greater than the sum of the parts’.

Given this prior recognition of the issues, questions are often asked by economists, ecologists

and policy makers like:

Why is the concept of ecosystem services needed?


What is the policy issue that the concept of ecosystem services is trying to address?

Below, we identify several major policy challenges that an ecosystem services approach can add

considerable value to:

Getting environmental issues heard in public decision-making

Improving the quality and efficiency of public engagement in development and

implementation of environmental policy

Explaining and justifying environmental policies in the context of broader policy issues

Developing whole of government understanding of, and strategic approaches to, the

interrelationships between environmental, social and economic issues

Mobilising non-government resources to complement government efforts to address

public environmental issues

Considering equity in decisions that involve multiple social, economic and

environmental issues

Maintaining conservation of biodiversity as a key societal goal

Proponents of an ecosystem services approach do not suggest that this approach should replace,

or is even capable of replacing, other scientific and/or policy approaches to dealing with these

issues. It is an overarching framework that potentially integrates other approaches in some

circumstances. Ways to identify when an ecosystem services approach is most appropriate are

discussed in Section 6.3.

4.2.1 Getting environmental issues heard in public decision-making

Although disciplines like economics have developed approaches to identifying and potentially

dealing with benefits from the environment that are not captured by markets (so-called

‘externalities’), economic arguments often do not carry sufficient weight with politicians for

them to compete with the arguments of vested interests. The language of ecosystem services is

becoming better known and is developing strong international credibility. It is language that

politicians can use and be understood by their peers and their constituents. The essence of an

ecosystem services approach is discussed further in Chapter 6.

4.2.2 Improving the quality and efficiency of public engagement in development and

implementation of environmental policy

Because the benefits to humans from ecosystems are both public and private and the

beneficiaries are many and varied across the whole of society, there is a need for language and

concepts that potentially allow all stakeholders to both understand the benefits that they stand

to gain or lose from landuse decisions and to engage in productive dialogue about those

decisions. Although in theory governments represent public interests and often intervene to

protect those interests in the face of market forces that favour private interests, it is difficult for

governments to act if the public is unaware of the benefits that are possible and/or unable to

articulate their preferences. As discussed in the subsection above, and further in Chapter 6,

ecosystem services approaches have been shown to be powerful ways to generate productive

dialogue among stakeholders.

From the point of view of governments, it is important that inputs to decision-making are

supported by sound evidence about the nature of the issues (including pubic opinion about


them), the context and causes of those issues, the options for addressing the issues, the

implications of different decision options, and adequate consultation with all stakeholders. In

relation to environmental issues, it has been difficult to obtain informed views from the public

because relationships between humans and the environment were often represented in narrow,

stereotypic ways by competing interest groups and constructive consideration of tradeoffs

between competing interests was difficult because there were few frameworks for considering

aspects of environmental management, from conservation to production, together. Combining

ecosystems services frameworks with scenario analysis, and consideration of emerging

understanding of resilience, adaptability and transformability in ecosystems and societies, is an

effective way to not only generate dialogue but enable critical consideration of evidence

(Chapters 6 and 11).

4.2.3 Explaining and justifying environmental policies in the context of broader policy

issues

Flowing from the previous point is the responsibility of governments to explain their decisions,

which has often been difficult in relation to environmental decisions. A particular challenge is

explaining the nature and consequences of tradeoffs between economic, social and

environmental values or between competing environmental values. Approaches to assessing

ecosystem services are focussing increasingly on trade-off analysis, which not only allows

dialogue about those trade-offs but often reveals that what were expected to be trade-offs often

do not need to be if alternative management options are considered. Approaches to ecosystem

services analysis are discussed in detail in Chapter 8.

4.2.4 Developing whole of government understanding of, and strategic approaches to,

the interrelationships between environmental, social and economic issues

Most government departments do not understand environmental issues and do not see the

relevance of environmental policy to them. This has led to the environment struggling to be

heard in budgetary debates within government and, arguably, to sometimes perverse

environmental implications from decisions made in non-environment departments. Similarly,

opportunities for synergies with environmental policies have likely been overlooked. In Chapter

11 we report strong opinions from interviewees that there is a need for better strategic

consideration of environmental issues across government departments and we outline how

steps towards this objective might be made by developing common language and concepts

around the potential benefits from ecosystems and their implications for the business of

government departments.

4.2.5 Mobilising non-government resources to complement government efforts to

address public environmental issues

A further issue is the strong dependence of Australians on governments to solve society-wide

problems, including environmental ones. It is becoming increasingly clear that the whole of

society needs to contribute to solutions to Australia’s environmental challenges, including the

relationships between environmental management and other ‘wicked’ policy challenges like

population policy, climate change and food security, but a framework for debating this issue has

been lacking. In Chapter 11 we make recommendations about how the Australian Government

might act to encourage and empower other sectors of society to play a greater role in strategic


dialogue and action to improve alignment between human wellbeing and environmental

management.

4.2.6 Considering equity in decisions that involve multiple social, economic and

environmental issues

In their review for the Natural Resource Management Standing Committee, Cork et al.63 noted

that:

Conventional benefit-cost analysis does not deal well with ethical issues such as fair distribution

or intergenerational equity. The validity of valuation techniques for non-market services,

particularly intangible services such as ‘aesthetics’, is highly contestable. Many people consider

the ‘utilitarian’ nature of benefit-cost analysis inappropriate for making decisions about

environmental assets with ‘intrinsic’ value. An ecosystem services approach does not resolve

these issues – in fact it can bring them to the fore – but it does provide a basis for dialogue about

what the values are that are being contested. Often this debate occurs without such a framework

so the potential for miscommunication is large.

This observation remains relevant today. Approaches such as that being pioneered by the

USEPA,160, 161, 194, 233 which focus on identifying not only the benefits from ecosystems but also

the beneficiaries at a range of scales of space and time, provide important additional inputs to

dialogue about equity issue that market signals or vote numbers in elections can convey.

4.2.7 Maintaining conservation of biodiversity as a key societal goal

Some conservation interests and government departments with responsibility for conserving

biodiversity have expressed concern that a focus on ecosystem services might diminish the

perceived importance of conserving other species for their intrinsic value and/or for moral and

ethical reasons. While biodiversity is recognised as the key underpinning of ecosystem services

in all widely accepted frameworks, there are differences in how conservation of biodiversity is

dealt with in different frameworks. Some have argued that conservation should be considered as

an ethical issue separate from the use-based considerations often emphasised in an ecosystem

services approach. Others argue that biodiversity should have two key roles in an ecosystems

services framework: Maintenance of biodiversity by ecosystem processes can be seen as a so-

called ‘intermediate service’ (a service that helps to generate other services) and as a ‘final

service’ (a service that is valued directly by people).222 Whichever approach is taken, it can be

argued that an ecosystem services approach can be a way to enhance rather than detract from

the importance of human intervention to conserve biodiversity.222 Concern remains high,

however, because despite numerous demonstrations of the economic and social value of

biodiversity conservation it is questionable how much people are really willing to pay when

more tangible aspects of their wellbeing are perceived to be under threat.176 Whether or not this

is true, it makes sense to have an open and informed dialogue — in the words of the late David

W. Pearce ‘begin … with an honest appraisal of just how little we do [value biodiversity]’176 — so

that all stakeholders are aware of the short and long-term implications of decisions about

biodiversity conservation.


4.3 Definitions

The literature on definitions and classifications of ecosystem services can be very confusing, not

only to the uninitiated but also those who have been involved in ecosystem services research for

many years (including the authors of this report). In Appendix I we give examples of a range of

different definitions. In this section we explain the reasons for these differences.

We conclude that definitions of ecosystem services appear to be in a transition from ones that

saw ecosystem services as ‘benefits to people from ecosystems’ to ones that define ecosystem

services as ecological phenomena and benefits as things that flow from services as a result of

human inputs. While some proponents of ecosystem services approaches still prefer the older

‘benefits from ecosystems’ definitions because of their simplicity and utility as communication

tools (see also Section 4.4), four recent definitions that capture the latest thinking and are likely

to be appropriate for use by the Australian Government for a range of purposes are:

… [final ecosystem services are] the components of nature, directly enjoyed, consumed,

or used to yield human well-being42

… the direct and indirect contributions of ecosystems to human well-being210

… the aspects of ecosystems utilized (actively or passively) to produce human well-

being102

… the contributions that ecosystems make to human wellbeing, and arise from the

interaction of biotic and abiotic processes114

Further conclusions from our review (explained more fully in the rest of this subsection)

include:

Ecosystem services are so-named because they arise from the actions of suites of species

interacting with one another and the non-living environment — things that might be

valuable to people that arise from nature but do not require these interactions (e.g.,

minerals, sunlight, tidal energy) are not considered to be ecosystem services

Ecological processes that require inputs from humans (e.g., processes occurring in

agricultural systems) are not in themselves considered to be ecosystem services,

although they are likely to have ecosystem service components and are examples of

synergy between ecosystem and human processes

To avoid problems of double counting in environmental-economic accounts, a distinction

has been made in all recent major studies between ‘final ecosystem services’ — those

that are directly used by people to provide benefits — and ‘intermediate ecosystem

services’ — those that form part of a ‘cascade of services’ that support one another and

underpin final services

Some services can be intermediate in some circumstances and final in others, depending

on the nature of human needs

There is more disagreement about how to define ecosystem ‘functions’ and there is a

lack of clarity about how to distinguish ecosystem services from assets such as stocks,

capital, infrastructure and the like — this is not likely to be a major problem for the

Australia Government as it easily addressed by defining services in terms of processes

rather than assets, as done by most sectors of the economy


As discussed in Section 4.4, although agreement on a common definition of ecosystem

services is likely to be achievable in the near future, it is recommended by several

experts that there should be different classifications of ecosystem services for different

purposes (although those different classifications should be consistent with one

another).

The debate about definitions revolves largely around the concept of ‘benefits’.

Early definitions, such as those of Costanza and colleagues,69 Daily74 and the Millennium

Ecosystem Assessment,144 equated ecosystem services themselves with benefits:

… the benefits human populations derive, directly or indirectly, from ecosystem functions69

… conditions and processes through which natural ecosystems, and the species that are part of

them, help sustain and fulfil human life74

… benefits that people receive from ecosystems143

These definitions were deliberately broad and simple to help make the sometimes-complex

issues associated with ecology and economics more easily digested by non-specialists.67 They

are still widely used. The Millennium Ecosystem Assessment definition has been used by the

Australian Government,21 presumably for the purposes of communication and education. Most

successors of the Millennium Ecosystem Assessment — The Economics of Ecosystems and

Biodiversity (TEEB) program,210 the UK National Ecosystem Assessment228 and the Global

Partnership for Wealth Accounting and the Valuation of Ecosystem Services (WAVES)137 — have

also adopted the broad definition.

As explained further in Section 5.2, however, definitions have been reassessed in the past few

years as the concept of ecosystem services has been applied more comprehensively to

understanding and assessing the links between ecosystem processes and human wellbeing and,

especially, in situations that require rigorous accounting for benefits. The debate began with

concern that definitions of ecosystem processes, functions, services and benefits were not

sufficiently clear or agreed and that some so-called services were being counted as both means

for generating benefits and ends in their own right.102, 241 The Millennium Ecosystem Assessment 143 brought a heightened focus on the benefits of ecosystem processes by more explicitly

defining human wellbeing and the paths by which ecosystems might contribute to wellbeing.

Binning et al.34 suggested that services should be defined in terms of the transformations that

they mediate (because in economics services are defined as transformations of one sort of

capital into another), and Wallace argued that they should be defined in terms of the human

needs that they meet.241 While neither of these arguments has been taken up explicitly, the

debate has moved to the point that recent publications have distinguished between ‘final

ecosystem services’, which directly yield benefits to people, and ‘intermediate ecosystems

services’, which are still beneficial to people but act to support other services that directly

provide benefits.42, 102

The impetus for these more recent recommendations was the need to avoid double counting so

that ecosystem services typologies could be better aligned with economic theory and practice.

However, their effect was to also encourage further debate about the nature of ‘processes’,


‘functions’, ‘services’ and benefits. While there appears to be general agreement about what

ecosystem processes are (i.e., all interactions among components of an ecosystem), there is

disagreement about the use of the word function. Although this term is used routinely by

ecologists to denote functions that maintain ecosystems, some commentators are concerned

that its use in an ecosystem services context infers some sense of human-centric purpose that is

unacceptable to some stakeholders.102 This human-centric bias is apparent in the definition of

ecosystem functions used by de Groot et al.81 — ‘the capacity of natural processes and

components to provide goods and services that satisfy human needs, directly or indirectly’ —

but not in the definition used by Maynard et al.,150 — ‘the biological, geochemical and physical

processes and components that take place or occur within an ecosystem’.

Two key areas that remain unresolved (although they are moving towards resolution) are:

exactly which processes can quality to be ecosystem services

whether services and benefits should be separated.

One element of the debate about what an ecosystem services is relates to what a ‘service’ is. The

debate about intermediate and final services and ‘cascades of services’ has helped to sort out

previous concerns about mixing ‘means’ and ‘ends’ in ecosystem services approaches. However,

the sense of the word ‘service’ seems to have been lost in recent literature. In older literature, it

appears that the word ‘service’ was deliberately used to denote the same sort of process that is

involved in a ‘service economy’ — that is, a ‘transformation of capital’ or ‘performance of a

process’ to provide a benefit that would not otherwise be available.34 In a recent paper that

claims to sort out a lot of the confusion about definitions of ecosystem services, Fisher et al.102

define ecosystem services as ‘aspects of ecosystems utilized (actively or passively) to produce

human well-being’. They argue that this definition includes: ‘ecosystem organization or

structure as well as process and/or functions if they are consumed or utilized by humanity

either directly or indirectly’. Thus, they include stock, capital and infrastructure as services. This

is a good definition of ‘things that are important to humans from ecosystems’, but it is not a

definition that is consistent with definitions of ‘services’ on any other fields. It might seem

pedantic to make this point, but a sure way to inhibit interdisciplinary dialogue is to use

common terminology inconsistently. A solution might be to rephrase ecosystem services in ways

that convey the transformation of process: for example, ‘maintenance and renewal of natural

capital’ or ‘generation of natural capital’ in the example above.

A second element of the debate about what constitutes an ecosystem service is the distinction

between services provided by ecosystems and those provided by humans. The intent of

ecosystem services approaches from the beginning has been to recognise the benefits that come

from systems of ‘natural’ species.74 Several authors have argued that there is a need to

distinguish between the inputs from humans and the inputs from ecosystems when considering

benefits that have an ecosystem component.42, 101, 102, 128 It is argued that ecosystem services

should be considered to be ecological phenomena and that benefits to people usually require

some human input. For example, ecosystems maintain soil fertility but humans plant the crops

to produce food. This might seem to be a complicating factor but it makes dealing with

multifunctional landscapes easier and clearer. For example, in their assessment of the inputs to

human wellbeing from ecosystems in southeast Queensland, Maynard et al.150 considered the

contributions to food production of both from natural ecosystems and agricultural ecosystems

that required input of materials and labour by humans. When considering the roles of


landowners and managers in delivering services such as water purification or natural pest

control to the public108 in the future, it will be useful to consider the overall social benefit and

the contributions made by ecosystems and humans.

The debate about whether services and benefits should be separated has already been alluded to

above. The argument for separating them is to recognise that human input is usually required to

yield the benefit. For example, some ecosystem services studies identify ‘delivery of water for

drinking’ as an ecosystem service. It can be argued that the ecosystem service is provision of

clean water and the benefit is drinking water for domestic consumption, which requires both the

demand from people to exist and some infrastructure to take the water to taps.42, 102 This

distinction also highlights the point made by several authors that while ecosystems might

produce outcomes that could be beneficial to humans, they only become benefits when people

want them. To take this into account, Maynard et al.150 discuss the merits of estimating both

actual and potential ecosystem services.

Table 2 illustrates the distinction between benefits and services according to some authors.

There is variation and a certain lack of clarity among recent studies in how this is dealt with. In

The Economics of Ecosystems and Biodiversity (TEEB)215 and the UK National Ecosystem

Assessment,228 ecosystem services are defined as ‘benefits from ecosystems’ but it appears that

services and benefits were identified separately. A recent consideration of soil ecosystem

services in Australia30 clearly delineated between services and benefit. The study by SEQ

catchments in Australia150 defines ecosystems services in terms of their benefits but considered

the separate inputs from ecosystems and humans, as explained above.

Table 2: Examples of the distinction between ecosystems services and the benefits that flow from them with

human inputs42 (see also Section 5.1).

Illustrative benefits Illustrative ecosystem services

Harvests

Managed commercial Pollinator populations, soil quality, shade and shelter, water

availability

Subsistence Target fish, crop populations

Unmanaged marine Target marine populations

Pharmaceutical Biodiversity

Amenities and fulfilment

Aesthetic Natural land cover in viewsheds

Bequest, spiritual, emotional Wilderness, biodiversity, varied natural land cover

Existence benefits Relevant species populations

Damage avoidance

Health Air quality, drinking water quality, land uses or predator populations

hostile to disease transmission

Property Wetlands, forests, natural land cover

Waste assimilation

Avoided disposal cost Surface and groundwater, open land

Drinking water provision


Avoided treatment cost Aquifer, surface water quality

Avoided pumping, transport cost Aquifer availability

Recreation

Birding Relevant species population

Hiking Natural land cover, vistas, surface waters

Angling Surface water, target population, natural land cover

Swimming Surface waters, beaches

Taking the above considerations into account, three definitions that are likely to be acceptable to

most proponents of ecosystem services approaches (although some might prefer earlier

definitions) are:

… [final ecosystem services are] the components of nature, directly enjoyed, consumed, or used to

yield human well-being42

… the direct and indirect contributions of ecosystems to human well-being210

… the aspects of ecosystems utilized (actively or passively) to produce human well-being102

We note here that, since this report was written, Nahlik et al. (2012)160 have published a review

of frameworks for ecosystem service analysis and have drawn essentially the same conclusions

as this report. They concluded that separating services from benefits, and focussing on final

ecosystem services, is not only consistent with the majority of recent discussions but is also a

way to allow a range of disciplines to engage with the concept of ecosystem services. They

propose a process the interdisciplinary refinement of definitions for ecosystem services and

development of plans to see the concept implemented in policy. This type of approach is similar

to hat we proposed in our recommendations arising from this report.

4.4 Different classifications are likely to be needed for different purposes

In response to a paper by Wallace (2008),241 which questioned the vagueness of the definition of

ecosystem services as ‘benefits to people from ecosystems’ and the inconsistency of existing

classifications of ecosystem services, Robert Costanza, a pioneer of the concept, argued that such

a definition is:

… a good, appropriately broad and appropriately vague definition. This definition includes both

the benefits people perceive, and those they do not. The conventional economic approach to

‘benefits’ is far too narrow in this regard, and tends to limit benefits only to those that people

both perceive and are ‘willing to pay’ for in some real or contingent sense. But the general

population’s information about the world, especially when it comes to ecosystem services, is

extremely limited.67

Costanza further argued that different definitions and classifications of ecosystem services

might be needed for different purposes. Others102 have agreed with him that different

classifications may be needed (Table 3), although, as explained in the previous sub-section,

many are arguing for a single definition of ecosystem services.


Table 3: It has been argued that different classifications of ecosystem services might be needed for different

purposes but that a common definition should be sought.102

Purpose Characteristics of classifications Implications for definition

Understanding and

education

Categories need to be expressed in plain

language that is understandable to the target

audience(s)

Broad definitions referring to

‘benefits from nature’ are successful

at meeting this purpose, while more

complex ones can confuse some

stakeholders67, 74, 150

Environmental-

economic accounting

analysis

To allow the aggregated net benefits (be

they measured in economic or other terms)

of ecological systems to be assessed, it is

important that classifications are based on

discrete units so that benefits or costs are

only counted once

This purpose has led to definitions

that distinguish between

‘intermediate’ (which contribute to a

‘cascade of services’115 services and

‘final’ services (which are directly

‘consumed or enjoyed’ by humans)42

Landscape

management

In landscape-scale analyses, there needs to

be consideration of where benefits and

beneficiaries are in relation to one another

and how these arrangements might change

through time. Approaches to date have

relied on mapping aspects of ecosystem

function (see Section 8.5). This requires

classifications that explicitly link services,

benefits and beneficiaries with the

underpinning ecosystem processes and

functions.77, 150, 188

For this purpose, definitions need to

very clearly distinguish between

processes, functions, services and

benefits. This has been an area of

considerable confusion in the

literature.30, 102

Public policy and

equity in human

wellbeing

Public policy often deals with all aspects of

ecosystem services considered in this table,

but one particular concern of governments is

ensuring that public goods and services are

shared equitably. Classification for this

purpose have focussed strongly on classifying

beneficiaries and the links between

ecosystem services and human wellbeing.30,

42, 150, 194, 241

Wallace241 attempted to define

ecosystem services directly in terms

of human needs. This paper

generated considerable useful

discussion but the definition has not

been adopted widely. Most existing

definitions do refer to human

wellbeing in terms of ‘benefits to

people from ecosystems’ but the

explicit consideration of public-

private distinctions and equity issues

is dealt with by drawing on the

disciplines of economics and social

sciences.

Meeting multiple

objectives

For both policy and land management the

major challenges are setting and achieving

multiple environmental, social and economic

objectives in an integrated way. This means

that classifications of ecosystem services

may need to include all of the elements

As mentioned above, the more

technical and complex definitions

can inhibit dialogue with some

stakeholders but simpler definitions

can hinder dialogue with others.


Purpose Characteristics of classifications Implications for definition

considered above, possibly in a nested was

that allows different aspects to be

emphasised with different audiences.

4.5 Alignment with economic approaches to benefits

The concept of total economic value (TEV) (Figure 3) addresses the same set of benefits to

humans as ecosystem services but it not as explicit about what these benefits are and does not

put an emphasis on engagement with stakeholders in identifying and understanding the benefits

and beneficiaries. TEV is a framework for economic analysis while ecosystem services is

primarily a communication device that focuses on identifying what the benefits are in language

that engages a wide range of stakeholders in strategic dialogue that is usually not possible

around economic analyses. The tools of TEV are necessary, but not sufficient, to support an

ecosystem services approach.

Figure 3: The concept of total economic value.27, 170

There have been some examples of misinterpretations of the relationships between ecosystem

services and TEV. For example, in 2002 an OECD report 169 inferred that ecosystem services

were equivalent to direct and indirect use values only. This misinterpretation was copied in

some other publications and used by some representatives of Australian farmers for a few years 63 but appears no longer to be used in the literature or in practice.

A recent attempt to more explicitly align ecosystem services classifications with economic

theory and practice is shown in Figure 4. As discussed in the previous sub-section, classifications


like this are useful when the purpose is to bring ecosystem services into an economic analysis,

but they can be confusing for some other purposes.

Figure 4: Goods and services can be characterized along a continuum from rival to non-rival and from

excludable to non- excludable.

Some goods that are non-rival at low use levels (fisheries and CO2 storage) can move towards becoming rival

goods with high use.102

4.6 Multifunctionality

In Europe and parts of Asia it has been popular until recently to use the terms

‘multifunctionality’ or ‘multifunctional landscapes’ to refer to landscapes managed for multiple

market and non-market values.2, 39, 49, 82, 99 This approach has been controversial as it became

associated with payments to farmers to continue farming in traditional ways to maintain the

cultural and tourism values of landscapes. This was interpreted as subsidisation of agriculture

by some and challenged under World Trade Organisation regulations. Similar controversy has

arisen in response to payments to rice farmers in Asia.39


5 Conceptual frameworks and typologies

Key conclusions from this chapter:

Most recent typologies of ecosystem services have made the distinction between services

that have indirect benefits to humans (often, but not always, called ‘intermediate services’)

and services that have direct benefits (often called ‘final services’) — this has been an

important advance to avoid double counting of benefits and to align ecosystem services

approaches with theory in economics and ecology

Most recent typologies refer to three categories of ‘final’ services: Provisioning services (e.g.,

provision of food, water, fibre and fuel); Regulating services (e.g., climate regulation,

regulation of river flows, control of diseases); and Cultural services (e.g., spiritual, aesthetic,

recreational and educational opportunities) (or equivalent names)

Several high-profile projects have continued the Millennium Assessment practice of referring

to a fourth category of services —Supporting services (e.g., primary production, soil

formation) — but treating these as ‘intermediate services’ when assessing benefits (this can

be confusing to readers not familiar with the origins of this fourth category in earlier

typologies)

Most recent typologies continue the practice adopted by the Millennium Ecosystem

Assessment of being explicit about the presumed relationships between ecosystem services

and human wellbeing (see also Appendix II).

5.1 Conceptual frameworks

The original conceptual frameworks for ecosystem services69, 74 defined ecosystem processes,

functions and services loosely. This has sometimes led to confusion, lack of uptake of the

concept, and even strong opposition to its use, especially from some ecologists and economists.

Research over the past 14 years has modified the original conceptual frameworks in several

ways:42, 77, 81, 101, 128, 241

Broad categories of ecosystem services have been identified (provisioning, regulating,

cultural and supporting)

Relationships between ecosystem services and human well being have been made

explicit

The concept of ‘intermediate’ and ‘final’ ecosystem services has been introduced to avoid

the potential double counting of benefits

In some conceptual frameworks the maintenance of biodiversity has been included as a

service (e.g., ‘habitat service’) and in others it has been considered to be an underpinning

enabler of other ecosystem services (in the most recent frameworks, habitat services

have been considered to be ‘intermediate’, and therefore underpinning, services)

The following three figures illustrate the evolution of thinking about ecosystem services over the

past 14 years. Figure 5 is the conceptual framework used in the Millennium Ecosystem


Assessment during 2000 to 2005. This framework built on the earlier definitions and typologies

of ecosystem services such as those developed by Costanza et al.69and Daily74 (see Appendices I

and II). The dialogue associated with the Millennium Ecosystem Assessment revealed that

neither the relationships between ecosystem services and human wellbeing nor the nature of

wellbeing itself were well understood by the general public, policy makers or social and

biophysical scientists. One major contribution of the Millennium Ecosystem Assessment

conceptual framework, therefore, was to address these relationships explicitly.

Figure 5: A simplified version of the conceptual framework relating drivers of change, ecosystem services and

human wellbeing from the Millennium Ecosystem Assessment.144

The relationship between ecosystem services and human wellbeing was specified in more detail in other

parts of the framework, as was the nature of potential policy and management interventions.

The Economics of Ecosystems and Biodiversity (TEEB) program built on the Millennium

Ecosystem Assessment with a focus on developing the conceptual framework further so that it

aligned better with economic valuation principles.210 It was set up under the auspices of the

United Nations Environment Program with a large number of international sponsors and

partners (http://www.teebweb.org/Home/tabid/924/Default.aspx). One key advance in this

framework is the explicit separation of ecosystem functions, services and benefits (Figure 6).

This was a key step required to align ecosystem services thinking with economic theory and

practice, which is addressed further in Figure 7.

http://www.teebweb.org/Home/tabid/924/Default.aspx


Figure 6: The conceptual framework used by The Economics and Ecosystems and Biodiversity project to link

ecosystems and human wellbeing.215

Figure 7 shows the latest thinking about how to align ecosystem services frameworks and

typologies with economic theory and practice. Progress towards this interpretation began with

the typology developed by deGroot and colleagues81 (see Appendix II) with major contributions

to the debate from Boyd and Banzhaf42, Wallace241 and Fisher and colleagues.101 It has been

further elaborated on in the most recent TEEB foundations document 78 but retains the same key

components.


Figure 7: The conceptual relationships between intermediate and final ecosystem services and benefits.101

The key advance in these recent conceptual frameworks is that the possibility of multiple

counting of benefits is reduced. By separating ecosystem services into intermediate and final

services and benefits, the approach recognises that only the benefits generated by the final

services can be aggregated. The contrast with previous approaches is illustrated in the following

quote101:

The Millennium Ecosystem Assessment divides ecosystem services into supporting, regulating,

pr

discussion paper on ecosystem services for the department of agriculture, fisheries ... · ·...

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